There is always a temptation to look at a year in isolation, rather than placing it in the context of a slightly longer view, maybe within the last — not to mention the next two, three or even five years. So, it’s not surprising to see commentary for 2023 suggesting home prices continuing to fall, global stock markets to crash, companies to be hit by rising interest rates and inflation and the continuing challenges from energy prices affecting households and businesses.
Sure, it’s very useful to know what’s just around the corner, but also to be able to place it in a larger or longer context. And while 2022 may have been a difficult year, it also followed a couple that were perhaps surprisingly good as it turned out. Who thought a global pandemic would be a reason for global markets booming?
So, it should not come as too much of a surprise that after such a large amount of fiscal stimulus, a correction is occurring. What may have surprised is the speed with which the correction came and the rapidity of the onset of inflation as well as the rate of central bank interest rate rises around the world.
This has led many to already speculate that central banks, the RBA included, may have now overreacted, following a delay in ‘pulling their monetary policy interest rate lever’ sooner in 2022. What may now follow is a rapid slowing of global economies, perhaps even some falling into recession.
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Disclaimer: The information contained in this document is provided for educational purposes only, is general in nature and is prepared without taking into account particular objective, financial circumstances, legal and tax issues and needs. The information provided in this article is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. While SMSF Association believes that the information provided in this article is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001.
Ian Irvine - Guest Contributor
Ian has been a keen investor for over 40 years and can draw on his experiences from both investing on his own behalf and also having worked in financial services for more than 30 years. Over this time, he has seen many changes that impact investors’ attitudes to in what and how they invest.
He started his career in what is now referred to as fast moving consumer goods (FMCG) or grocery, working for an Australian margarine manufacturer. In 1986, he was recruited to Westpac around the time of deregulation of the sector, where he spent 10 years before taking a role at AMP and then with ASX for 14 years up to the end of 2017. He continues to be involved with ASX; working on their educational programs.
In 1996, he and his wife established their own SMSF and again the experience and lessons learned regarding managing an SMSF over the years have provided him with many insights and ideas. He enjoys sharing these with others where these are helpful and always suggest that if an investor or SMSF trustee is unsure, that they should seek appropriate advice from a licenced professional.
Ian holds a B. Com (UNSW), and lives in Sydney and enjoys travelling to and meeting investors and SMSF trustee at the educational events with which he has involvement with from time to time.